USD/CNH: Further uptrend depends on a break above 7.0000 – UOB

Once USD/CNH clears the 7.0000 level it should be able to extend the upside momentum in the next few weeks, comment UOB Group’s Economist Lee Sue Ann and Market Strategist Quek Ser Leang.

Key Quotes

24-hour view: “We highlighted yesterday that ‘the pullback amid overbought conditions suggests USD is likely to consolidate today, expected to be within a range of 6.9500/6.9800’. USD subsequently traded in a relatively quiet manner between 6.9450 and 6.9649. Further consolidation appears likely, expected to be between 6.9400 and 6.9700.”

Next 1-3 weeks: “On Monday (27 Feb, spot at 6.9750), we highlighted that the strong boost in momentum from last Friday is likely to lead to further USD strength. We added, ‘The resistance levels to watch are at 7.0000 and 7.0200’. In the last couple of days, USD has not been able to make much headway to the upside. To maintain the upward momentum, USD has to break above 7.0000 within the next few days or the chances of further gains will diminish rapidly. On the downside, a breach of 6.9220 (no change in ‘strong support’ level) would indicate that the USD strength that started early this month has ended.”